Its Edwin’s Monday Evening Property Rant!

This week we look at the list of property “announcables” from Labor and talk about the elephant in the room – demand for property, which is not being addressed. The consequences of all this is obvious for those willing to look beyond the headlines.

Ahead, looks like demand will stay strong, and with more people waiting for the election and RBA cuts, supply of quality property is on the decline.

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

Markets Still Peaking Into Infinite Uncertainty: As Rules Are Broken!

This is our weekly market update, where we start in the US, cross to Europe and Asia and end in Australia, covering commodities and crypto along the way. This week markets were bullish, with the MSCI global index up 1.7% across the week, and up 0.3% just on Friday. Even the European STOXX 600 which fell 0.24% on the final trading day of the week managed another rise of 1.96% across the week, for a year-to-date gain of 8.82%. Australia’s ASX joined the party with a new high, and up 0.52% across the week.

But why, we should ask? Well, traders seem caught in the Trump announcement blizzard, though some are still asking is the market about to peak? Did DeepSeek mark the end of the AI bullish cycle? Are tariffs about to slash market gains? And is this the time for a Big-Short type of move?

Clearly no one knows – despite all the opinions out there among the talking heads. And frankly, if you are running your investments chasing these headlines, you will probably be in for a rude awakening when the market suddenly flips on its head, as it will at some point, because valuations do not support current levels, period. Meantime rules are being broken.

In the US, the fabled soft landing is morphing into a “no landing” as the 100 basis points worth of interest rate cuts from the Federal Reserve boosts the US economy, and keeps inflation sticky. Further Fed rate cuts are rapidly being priced out for the rest of the year, with just one more expected in December. Some economists are even muttering darkly about the possibility of a rate rise, if Donald Trump makes good on his moving feast of tariff threats. The latest of these would see the US place reciprocal tariffs on any country that currently taxes US goods

Australia’s ASX 200 rose 0.5% to a record high of 8,615.20 points, on gains across most heavyweight sectors. Local stocks were boosted by growing confidence that the RBA will likely cut interest rates by 25 basis points at a meeting next week, and kick off a shallow easing cycle on concerns over a slowing Australian economy. Though its not a done deal, as core inflation remained well above the central bank’s 2% to 3% target range after Government support for households pushed inflation down, at a cost, ahead of the upcoming election.

The RBA will also release new economic forecasts in an updated Statement on Monetary Policy. On Friday, RBA governor Michele Bullock will appear before the House of Representatives Standing Committee on Economics in Canberra. [She also will hold a press conference on Tuesday.]

Not to be outdone, across the ditch the Reserve Bank of New Zealand’s policymakers will meet on Wednesday, and they are expected to approve a third straight 50 basis point cut in the official cash rate.

In Crypto, Bitcoin is still muddling around the sub USD 100,000 level and was last at USD 97,576.

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The Credit Monster Which Is Strangling Australia!

As foreshadowed, housing has become a major battleground for the main parties, as record prices, an acute shortage of rental properties and high interest rates combine to significantly reduce affordability. We know that on an international basis, household debt to income ratios in Australia are significantly higher, than even New Zealand and Canada, who both have severe housing crises. Well, done Australia, a direct result of 30 years of bad policy, and overleverage. And weirdly even now, according to IFM data the surge in average loan sizes is behind the inexorable growth in Australian home prices.

Today I want to look at the latest data on new loans from the ABS, in a release which has now gone from monthly to quarterly, so data released this week covers the October to December quarter 2024. Talk about lagged data! The RBA gross debt levels for January reported a significant uplift, especially for investor loans, as I discussed in a recent post. “Is The RBA Really All In For A Rate Cut In February?”

On the way to this analysis though we need to pause on The Treasurers recent announcement that It will soon become easier for Australians with student loan debt to get a mortgage after Treasurer Jim Chalmers instructed the prudential regulator to relax how HECS was treated when banks conducted mortgage serviceability tests.

So we are seeing mortgage debt ballooning, to the benefit of the banks – see CBA’s recent results. When interviewed conveniently the CEO denied that growth in mortgage lending had any significant impact on house prices. But we know of course the strong credit impulse is one of the main drivers of home price growth, supported by greater demand from high migration, tax breaks for investors (many of whom are losing money on a cash flow basis) and lack of appropriate supply.

The whole housing issue is now an election battleground, with The Coalition opposition promising to allow home buyers to raid their superannuation savings for a deposit, and it has committed to watering down responsible lending obligations.

Both sides have policies which will boost housing demand and increase mortgage debt, driving prices higher. As a result, they would make the affordability situation worse.

Remember the word “mortgage” comes from the Old French phrase “morgage” which translates to “death pledge”. The term refers to the pledge ending, or “dying”, when the loan is paid or the property is foreclosed. Given the longer terms of new mortgages, and the later age of getting one, Mortgage defined as a death pledge has never been truer.

But then does ordinary Australians who want a home have any choice but to play this game? Frankly no, because the game is rigged!

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Economic Update: February 2025

This is my monthly summary of recent global and local economic events, based on an edited conversation I record with Nuggets News. This time we look at the Trump effect, higher for longer interest rates, and the impact of tariffs. Plus the local impact of poor housing policy and the upcoming election. Some important questions about what the real agenda is, and who is calling the shots.

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/

DFA Live Q&A HD Replay: Feeling The Pain: A Deep Dive Into Post Code Property Data

This is an edit of a live discussion as I walked through my latest analysis at a post code level, looking at financial pressure, and future price scenarios. We focused specifically on property investment by looking at gross and net rental yields, including heat maps of major urban centers. Some are deeply under water!!

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/

Its Edwin’s Monday Evening Property Rant!

Despite the restrictions on what we can say (sic) Edwin and I are back for another Rant, looking at the latest industry tricks, and numbers. We also kick around the questions around auctions, including vendor paid advertising, and how to counteract the emotion drummed up at the event.

And, given the hopes of rate cuts, and the anticipated upcoming election, how is this playing into the market; as well as the impact of the lower exchange rate.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

Higher For Longer Is The Watchword, As Confusion Reigns….

This is our weekly market update where we start in the US, cross to Europe and Asia and end in Australia, covering commodities and crypto on the way. It’s the digest I use to help me understand what’ happening, and I hope it may help you too, despite the fact that this show actually takes longer to make than my others and tends to get lower views. But it’s the critical underpinning of all my work, so it’s really important! And be warned we cover a lot of ground!

This was another complex week, with waves of news, directives, trade issues and economic data causing ripples across markets, against the backcloth of reinvigorated inflation fears, and questions of whether Central Bankers are really as smart as they like to think. The global MSCI index was pretty flay across the week, but down 0.67% on Friday, while the European STOXX 600 rose 0.59% across the week, having closed at a record high on Thursday, helped by mostly robust company earnings but also falling on Friday.

US equities closed broadly lower after the economy added fewer new jobs last month than expected, and a survey found consumers increasingly worried about rising prices, bolstering the case for the Federal Reserve to hold rates steady for longer.

U.S. job growth slowed more than expected in January, likely restrained by wildfires in California and cold weather across much of the country, but a 4.0% unemployment rate probably gives the Federal Reserve cover to hold off cutting interest rates at least until June.

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/

Who’s Really Calling The Shots? With Tarric Brooker

Journalist Tarric Brooker is back with charts, to parse the latest economic data, as we look at who is really calling the shots. Truth is, below the headline data there are some important issue to pick apart. And what we are being presented as the truth may be spin.

Tarric’s charts are available at: https://www.burnouteconomics.com/p/dfa-chart-pack-7th-february-2025

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Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/

Kiwi Unemployment Rate Rises To 5.1%, Highest Since 2020!

The New Zealand unemployment rate continues to climb, reaching 5.1% in the December 2024 quarter, according to the latest Stats NZ figures – the highest level it’s been since 2020. It’s up from 4.8% in the September 2024 quarter.

Men accounted for 85% of the annual decrease in employment, reflecting substantial falls in the male-dominated occupation groups of technicians and trades workers, and machinery operators and drivers. Within the overall decrease in seasonally adjusted employment for men, there was also a shift from full-time to part-time work. While the number of men in full-time employment fell by 36,000 annually, the number in part-time employment grew by 9000.

While politicians throw rocks across the aisle, the one lever of interest rates at the heart of monetary policy is deeply flawed.

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RBA Rate Cut Not A Done Deal Yet, But…

The RBA has held the cash rate at a 13-year high for more than a year, awaiting further evidence that inflation is irreversibly back to its 2 per cent to 3 per cent target. Markets since Mr Trump returned to the White House are on a roller-coaster ride as I discussed on my live show on Tuesday. Now Beijing has hit back with tariffs on US goods in a swift response to new American levies on Chinese imports. Earlier, Mr Trump suspended his threat of hefty tariffs on Mexico and Canada for a month. So what will the RBA do?

While one factor in play is Donald Trump’s chaotic trade policies, we also have the “adjusted real inflation rate looking though the Government support for electricity, rents and medicals. Is the inflation really well anchored in the 2-3% band, a signal the RBA is seeking?

The December quarter inflation report did little to counter the RBA’s consistent message demand in the economy is still too high.

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/